Puts Pop as Adobe Systems Incorporated (ADBE) Drops

Adobe Systems Incorporated (ADBE) puts are trading at 46 times the average intraday pace

Mar 18, 2015 at 10:50 AM
facebook X logo linkedin


Adobe Systems Incorporated (NASDAQ:ADBE) is off 2.5% at $77.72, as the company's lower-than-expected current-quarter outlook overshadows a strong fiscal first quarter and price-target hike to $85 from $80 -- territory yet to be charted -- at Evercore ISI. In the options pits, speculators have taken the glass-half-empty approach, and are scooping up puts at a rate 46 times the average intraday pace. Meanwhile, in the wake of last night's scheduled event, the equity's 30-day at-the-money implied volatility has plunged 24.5% to 24.5%.

Drilling down on specific strikes, ADBE's March 72.50 put has seen the most action. It appears the majority of positions are being bought to open, as traders gamble on a steeper slide through week's end, when the front-month series expires. Should the stock be sitting north of the strike at Friday's close, today's put buyers can rest easy knowing the most they stand to lose is 100% of the premium paid.

Today's accelerated put activity marks a change of pace in ADBE's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ADBE's 50-day call/put volume ratio of 2.71 ranks in the 97th annual percentile. Simply stated, calls have been bought to open over puts at a faster clip just 3% of the time within the past year.

Technically speaking, the stock has enjoyed a lift higher from its 40-week moving average for more than three years. More recently, a sharp bounce off this historically significant trendline in early February helped send Adobe Systems Incorporated (NASDAQ:ADBE) to a record high of $80.30 on Feb. 27. Meanwhile, today's slide is being contained by ADBE's 40-day moving average, currently located at $75.53.

Weekly Chart of ADBE Since January 2012 With 40-Week Moving Average
 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!